Banning Lewis annexation agreement under scrutiny

Colorado Springs — The Colorado Springs City Council on January 16th heard public concerns about the request by Nor’wood Development Group and others to revisit the 1988 Banning Lewis Ranch annexation agreement. Lightly attended, the meeting began with staff presentations by Peter Wysocki, Director of Planning & Development and Bob Cope, economic development officer for the city.

This was a listening session for Council and President Pro Tem Jill Gaebler promised that answers to questions raised by the public would be addressed in a frequently asked questions (FAQ) on the city’s website. Council President Richard Skorman was absent.

Wysocki began the meeting, presenting an overview of the history of the ranch annexation and the city’s justifications for amending the annexation agreement.

“When it was annexed in 1988 it had a very specific master plan that accompanied the annexation and the city at that point actually hard zoned or assigned zoning with the annexation,” he began.

Wysocki wants to revisit the agreement to provide greater flexibility for both the city and developers. “We want to make sure that this annexation agreement is adaptable and is malleable and it can be implemented as city code requirements change over time and as our annexation practices change over time,” he said.

Wysocki stressed the importance of the ranch being far outside of city limits when it was annexed as the reason the city negotiated such stringent zoning and infrastructure requirements.

“It’s important to note that in the eighties when the annexation was proposed and considered by the city it was over two miles from any developed portion of the city,” he said. “As such, because it was so far from developed parts of the city there were significant development obligations and requirements placed on the future development of the ranch within the annexation agreement.”

Developers want more flexibility and fairness

Those obligations were put in place to ensure that the money needed for the city to extend infrastructure to meet the owner’s master plan for the property would be collected up front through a per-acre fee assessed on each development project. It is this up-front fee that appears to be a sticking point for developers today.

Timothy Seibert, Vice President of Nor’wood Development said, “What we’re asking for is a fair, equal splitting with every other development within the city limits.” Seibert wants to develop Nor’wood’s 18,000 acre holdings under current practices for recovering of fees and paying their obligations for building infrastructure.

In addition to the per-acre fees, zoning changes had to go through the formal rezoning process for any change to the existing master plan. “Any deviation from those boundaries requires a zone change,” said Wysocki. The new draft agreement maintains that requirement but also maintains the 1988 master plan zoning densities as of the date the new agreement is ratified. This includes changes that have been approved since the original agreement, and there are many.

Zoning changes are a quasi-judicial process that involve the Planning Commission and the City Council and any changes requested by a developer would still have to go through that process. However, the new agreement vacates the old one and all new applications for development would be considered according to present zoning and land use policies and procedures.

“The hope that we have is that it will create opportunity for those big, like Nor’wood’s ownership, and small like you heard from the owner of the church to take advantage of current practices for recovering of fees, paying their obligations, building necessary infrastructure under the current code,” said Seibert.

“The method of how development pays for itself has really evolved over the last number of decades, not just here in Colorado Springs but throughout the country,” said Wysocki. Codes have evolved to include payback models that include pro-rata, fair share and contribution to public improvements mechanisms, he says.

But no one so far at either public meeting has explained exactly how these new evolutions in land use regulation would be implemented in this case. This has caused skeptics to question whether or not the changes to the existing agreement constitutes a giveaway to the benefit of developers and a potential future financial obligation on Colorado Springs taxpayers.

“The obligations are not equitable with other annexations within the city and certainly since the annexations that were approved by the city in the 90s and 2000s, so Banning Lewis Ranch arguably is treated unfairly compared to other annexations like Briargate, Northgate and some of the others,” said Wysocki.

New agreement lacks a master plan

Councilman Bill Murray insists that present landowners of the ranch were fully aware of the annexation agreement and its requirements when they bought the property and should be held to that agreement unless they are willing to completely renegotiate the annexation.

“The key about the annexation agreement is that it [addresses] the development in its entirety. That created the costs,” Murray said.

What the city did originally was to determine the costs of the infrastructure for the end-use needs of the master plan. The city did this because it feared that inflation and slow development might make the improvements cost more in terms of future dollars. That could leave Colorado Springs taxpayers on the hook for the difference between what the city agreed to build and what it actually cost to build the infrastructure as time passes.

“We could conceivably renegotiate piece by piece, but that’s not what the city, through the developers, is asking for,” said Murray, “If Nor’wood wants to renegotiate the annexation agreement, fine, but let’s completely renegotiate it and get what the city needs.”

Murray is recommending a six-month timeline and an end to “secret settlement negotiations” about lawsuits filed to invalidate the original agreement that Nor’wood inherited and continued to pursue. In 2015 bankruptcy Judge Howard Tallman ruled that the agreement survives all the various bankruptcies and repurchases and that it “runs with the land.”

Seibert admits that developers can ask for changes on a project-by-project basis as things stand. “The agreement does not change the ability for any property owner, whether you own five thousand acres or a five thousand square foot lot, you can come in and ask the city for a change any time you want.”

But the new agreement keeps the old master plan zoning in place, which provides a vested right for developers to build according to those densities if they so desire. “we can also build under the existing zoning,” said Seibert. This vested right limits the ability of the city to reduce the densities of new projects, although the process for planning each development would use the current procedures.

This means that under the new agreement development at the much higher densities found in the existing master plan would still be possible.

Murry says that Nor’wood has not submitted a new master plan for its 18,000-acre majority ownership of the ranch. Without a new master plan to replace the one originally agreed upon he says it’s impossible for the City Council to make a proper informed decision on the long-term future of the area.

“We’re supposed to be strategic planners thinking in the long term. They want us to rush to judgment, rush to conclusion, rush to their benefit so this doesn’t come up as a bigger issue,” Murray said, “The bigger issue is that eventually [Nor’wood’s] intent is to develop the entire property. What does that mean in practical terms? Not in the beginning, not in the middle, but at the end. How does this fit in the bigger scheme of things? Because historically what has happened is when we don’t do it is that there are attendant costs.”

Wysocki says that holding developers to the requirements of the past is unfair. Explaining why developers should not be bound by the terms of the existing agreement, Wysocki says that many of them are no longer applicable.

“Infrastructure and services have really moved eastward and they are basically next door to Banning Lewis Ranch,” he said, “A number of these obligations really aren’t warranted anymore. There’s no nexus, they are not roughly proportional, if you will. All those terms, nexus, rough proportionality, are very important legal terms in terms of fair and equitable treatment of landowners and developers.”

Capturing economic development

Bob Cope, economic development officer for the city presented the predicted fiscal benefits with numerous Power Point slides painting a financial picture involving huge sums of money that ends up with claims of $49 million in net profit to the city, 6400 net acres of development, 18,000 single-family homes, 61,000 residents, 35,000 jobs, 10 million square feet of commercial space and $41 billion in long term economic development benefits over 30 years.

The original annexation agreement based its assumptions on the master plan, which proposed 76,000 residential units housing 180,000 residents served by 79 million square feet of commercial, office and industrial development, a ratio of 439 square feet of commercial space per resident.

The new agreement however, doesn’t mention any specific densities but preserves the right of developers to build to the 1988 density if they wish. But both Cope and Wysocki base their presentations on an assumption that only 9.6 million square feet of commercial space serving some 60,000 residents will be the ultimate build-out. That’s a ratio of 160 square feet per resident, a 64 percent decrease in taxable commercial floor space.

No explanation of how city staff came up with the lower density figures was available at press time.

Cope then discusses what the city has lost economically because the ranch has not been developed. Based on past development experience in the region Cope estimates that that the city has already lost 7,500 homes and 20,000 people along with 2,700 jobs and 250,000 square feet of commercial space and to unincorporated El Paso County.

“The 2,700 jobs translate into about 2.7 billion dollars in economic growth that we have lost,” said Cope, “And the ongoing temporary impacts of construction that would continue on an ongoing basis for many years is about $1.7, so if you add that to the $2.7 you’re talking about maybe $4.4 billion in economic growth that has been lost due to having the inappropriate annexation agreement in place.”

By “lost” he means lost to the city but which now accrues to the county and to Falcon.

Concern with capturing sales tax from economic activity and not letting it go to the county is high on the list of priorities for the city. Another major concern is that development in unincorporated El Paso County and surrounding communities creates demand for services from non-residents who use the city’s streets and parks. However, Cope did not address the economic benefits of non-residents visiting the city who spend money there.

Buildable land is getting scarce

Another city concern is the dearth of developable land within the city outside of the ranch. “Quite frankly we as a city have less than 10 years of growth opportunity within city limits, not counting Banning Lewis Ranch,” said Wysocki, “Based on our calculation there’s about 6000 acres within current limits, excluding Banning Lewis Ranch, that is undeveloped.” This appears to presume that the city is precluded from future annexations to the north, south or east.

Because the city’s financial model depends on sales tax revenues, Murray says that without the existing master plan’s authorized high-density residential zoning, including high-rise communities surrounding commercial space, there’s no way that development can pay its own way. “Single-family home developments have never done so,” he said.

Wysocki said “It is staff’s opinion that the zoning that was established back in 1988 establishes an unattainable density.” He didn’t explain how he came to that conclusion. He did however say that it was in the city’s best interests to concentrate high-density development and commerce downtown.

Future highway needs given short shrift

Another issue not touched upon by city staff at any of the public hearings that came up as part of the public input Tuesday was the future of the Banning Lewis Parkway.

The city’s 2000-2020 Comprehensive Plan Intermodal Transportation map identifies the Banning Lewis Parkway as a major north-south highway. It was conceptually meant to connect on the north to a yet-to-be built principle arterial that curves west through El Paso County to intersect with Powers Road at Briargate Parkway.

Powers Blvd. is also shown on the map as a major freeway connected to I-25 on the north and extending south to Peaceful Valley Road outside of the city limits, southwest of the Colorado Springs Airport.

One of the changes that Nor’wood is requesting is a narrowing of the right-of-way for the Banning Lewis Parkway. The agreement requires dedication of a 300-foot wide corridor suitable for a 4 to 8 lane roadway. Nor’wood is requesting that the right-of-way be reduced to 142 feet in width.

The parkway was planned to serve the projected build-out population of about 180,000 people. At 300 feet, it’s suitable for freeway construction. At 142 feet, it’s not. The new agreement maintains the 1988 zoning on the bulk of the property, which means that the build-out could potentially reach the “unattainable densities” Wysocki claims if developers decide to take advantage of the existing authorized zoning densities rather than building to the densities suggested by Wysocki and Cope.

In the 2000-2020 Comprehensive Plan Powers Boulevard was conceived as just such a limited-access freeway. But it ended up as an arterial obstructed by stoplights and intersections all along its route south of Research Parkway. North of Research Parkway recent bridge construction fulfilled the original intent of the Comprehensive Plan and the extension to connect with I-25 at Northgate is in the planning stages. But south of Research Parkway Powers is no longer a limited-access freeway.

Traffic along that stretch of Powers is a “nightmare” according to Murray. The costs of expanding Powers to handle the current traffic have fallen on the city rather than on the developers of the commercial and residential areas that have emerged along Powers. The redesign of Powers shifted the costs of later needed improvements onto city taxpayers rather than having developers pay for a limited-access highway with service roads to cater to the future development. This is the sort of risk that Murray says the city mitigated with the original Banning Lewis annexation agreement.

“When Powers was built, it was supposed to be a limited access highway until the developers got ahold of it,” said Murray, “Now it has streetlights every 150 yards. We’ve had to build extra lanes into Powers, and we’re not done yet. That cost the public.”

“They want to reduce the parkway from 300 feet to 142 feet, he continues, “What happens if [developers] then build out to the level we thought [they] were going to? Well that means you have to come back in and buy the property again to expand the highway. Think about I-25, it’s crazy, it’s 5 to 7 million dollars a lane-mile to come back in and do it.”

Maintaining the width at 300 feet with an eye to linking the parkway to Powers Blvd. on the north and I-25 on the south provides both access for the future residents of Banning Lewis Ranch even if the ultimate population density ends up being higher than Wysocki predicts. It also preserves a corridor for an eastern limited access beltway that can also relieve traffic on I-25 says Murray.

Unintended consequences can be costly

Preventing unintended consequence was one of the principle reasons the city required developers to pay for the infrastructure needed to serve the build-out population up front in the existing annexation agreement. “Once the first house is built out there the city is obligated to provide police and fire services,” said Murray.

He pointed out that the city has to build transportation, water, sewer, electrical and gas infrastructure based on the 30-years-in-the-future maximum legal build-out. It can’t afford to build inadequate facilities now and then go back in and replace them with larger ones just so that developers can save money at the front end. Without a master plan, noted Murray, the infrastructure costs cannot be properly calculated or addressed.

Citizen support for higher density development

Strongly disagreeing with the idea of revisiting the existing agreement, Matt Pritchard, speaking for his father Wesley Pritchard said, “High density [development] may be better for human-powered communities.” He also asked about campaign contributions to council members by developers. He echoed Councilman Murray’s call for extending the timeline to six months and added that the matter should be put to a public vote.

Walter Lawson told the Council that single-family detached dwellings are largely unaffordable to lower-income people. He said that the city has $1.8 billion in unfunded capital improvements already and wondered how relatively low-density single-family subdivisions will pay for themselves without more commercial development.

Lawson said that the 1988 agreement proposed activity centers built around 11 to 14 story residential buildings built on a plaza center. Developers at the time calculated that 37 units per acre on 76 acres that could yield 2,800 dwellings and 4,500 residents were necessary in order to get the sort of density that does pay for itself.

“What we’re doing is scary,” Lawson said, “Banning Lewis Ranch is proposing to do 95% single family housing. We know that can’t work. We are not paying our way now.”